Gold prices headed lower on Monday, after posting a gain last week, as traders awaited a Tuesday inflation report followed by the conclusion of the Federal Reserve’s June policy meeting on Wednesday.
Price action
-
Gold futures for August delivery
GC00,
-0.45% GCQ23,
-0.45%
fell $11.40, or 0.6%, to $1,965.80 per ounce on Comex. -
Silver futures for July delivery
SI00,
-1.47%
SIN23,
-1.47%
fell by 39.5 cents, or 1.6%, to $24.015 per ounce. -
Palladium for September delivery
PAU23,
+3.54%
gained $36.20, or 2.6%, to $1,341 per ounce, while July platinum
PLN23,
-1.87%
fell by $13.50, or 1.3%, to $999.30 an ounce. -
Copper for July delivery
HGN23,
-0.86%
declined by 3 cents, or 0.8%, to $3.76 per pound.
What’s happening
Gold traders are anticipating that the Federal Reserve will leave interest rates on hold after the conclusion of its June policy meeting on Wednesday. However, a hot Tuesday inflation report could push the central bank toward a surprise hike following Friday’s hotter-than-expected monthly U.S. jobs data.
See: Fed might hike interest rates again in June instead of a ‘skip,’ some economists think
As the U.S. central bank assessed whether higher interest rates are slowing inflation, markets have priced in a “skip” decision Wednesday from Fed Chairman Jerome Powell — “a scenario where hikes are paused but may resume at a later date,” said Stuart O’Reilly, market insight analyst at The Royal Mint, in emailed commentary.
The situation suggests the Fed “believes we’re approaching a pivotal moment and are looking to carefully understand the impact of recent rate rises on inflation and the U.S. economy,” he said.
While some could see the Fed’s upcoming decision as a “non-event, gold traders will be reading between the lines, and looking for any signal from Powell that the U.S. is heading for a recession or that core inflation remains sticky,” said O’Reilly.
Gold’s spot price hovers around the $1,950 mark, but “this could be propelled higher if economic data begins not to match the [Fed’s] intended outcomes,” he said. “Investors will be considering whether their portfolios are optimized for the economic environment we find ourselves in, and will be closely monitoring interest rates alongside broader economic indicators.”
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